A deficit of autonomy
10 Mar 2010, 0502 hrs IST, ET Bureau

State-owned telecom service provider BSNL makes a profit thanks to interest income and loses money from core operations, even as its private 
	
counterparts make money hand over fist. It cannot place equipment orders without inviting court cases, vigilance commission inquiries and intervention by the all-powerful telecom ministry, resulting in zero addition to network capacity over the last two years when the industry has been adding millions of subscribers every month. 

Clever powerbrokers think up innovative schemes to raid BSNL’s rich reserves. Is there a way out? Reportedly, a committee headed by Sam Pitroda has recommended a 15 point course of action to sort BSNL out. Among other things, the committee has recommended downsizing BSNL’s staff by 100,000 and outsourcing the ownership and management of the network on which it delivers its services to a third party, as Bharti and Vodafone do. These two recommendations go hand in hand — if BSNL no longer owns and manages its network, it does not require the manpower engaged for the purpose at present. 

A voluntary retirement scheme now, however, is likely to see off whatever talent the company still retains after private telcos built up, over the years, their expert manpower, recruiting from the stateowned telecom enterprises. What BSNL needs more than anything else, to pull itself out of its current losing streak, is autonomy from the telecom ministry. 

Any public enterprise that has done well in India owes its performance to autonomy from its controlling ministry . Such insulation can be provided only by the top political leadership. There is little reason to believe that this will not work in the case of BSNL as well. As its owner, the state has the right to mandate BSNL with policy objectives that go beyond turning in a profit. But after that, it should be up to the company to execute the mandate, without micro-management by the ministry. 

Rural transformation today depends on rich data connectivity, providing which need not be profitable in the short-term. BSNL, therefore, has a role that the private sector would not fulfil. If only the political leadership would allow it to deliver.